Reviews

Review of Richard Easterlin's Growth Triumphant: The Twenty-First
Century in Historical Perspective (Ann Arbor: University of Michigan, 1997).

J. Bradford DeLong
Professor of Economics
U.C. Berkeley

The title is a counterpoint to the title of Eric Jones's book, Growth
Recurring, that argued that economic growth was the natural state of
human societies. Richard Easterlin by contrast thinks--correctly--that
modern economic growth is a truly astonishing accomplishment: back before
the industrial revolution it would take millennia for living standards
to double, yet today we have grown used to our material prosperity doubling
every thirty years.

The subtitle is largely bait-and-switch. The book is not about the twenty-first
century in historical perspective. Some 40% of it is about technology,
40% about fertility and mortality, and 10% about the connection between
economic prosperity and human happiness. This leaves only 10% of the book
for a projection forward of the trends of the twentieth century into an optimistic
reading of the future: stable populations, rising living standards, international
convergence, and continued invention and innovation.

Nevertheless the book is well worth getting and reading. Richard Easterlin
is smart. More important, he is thoughtful. He tackles the big questions,
and comes up with answers that are in most parts convincing, and even where
unconvincing his answers are well and aggressively argued.

Easterlin's book makes three main points. The first is that modern economic
growth--what has been happening to productivity levels and living standards
for the past two centuries--is miraculous, unique, unprecedented. In the
millennia between the invention of agriculture and herding and the industrial
revolution, growth in average living standards over long periods was measured
in hundredths of a percent per year. Were you better off being a slave
in the household of Marcus Tullius Cicero in 62 B.C. or of Thomas Jefferson
in 1801? Were you better off as a (free) yeoman farmer in the Campania
region of southern Italy in the first century B.C. or in the eighteenth
century? In each case the answer is probably the second, but the
answer is not completely clear. Population densities were much higher in
1800, and increasing population density had eaten up the bulk--perhaps
the overwhelming bulk, and perhaps all --of improvements in total factor productivity.

By contrast, we call measured productivity growth of 1.0 percent per
year--plus somewhere between 0.5 percent per year and 1.5 percent per year
of improvmeents in livings standards that are not captured in our NIPA
tables--"slow growth". At 1.5 percent per year of growth, living
standards double every fifty years. At 2.5 percent per year, they double
every twenty five. Improvements in standards of living and material productivity
that used to take millennia to accomplish now pass us by between youth
and middle age. The past six generations of modern economic growth mark
the greatest break in human technological capabilities and material living
standards since the evolution of language or the discovery of fire. David
Landes was not indulging in hyperbole when he titled his study of technological
change in the industrial revolution The Unbound Prometheus.

The second major point is that the population explosion is almost over.
As Easterlin sees it, the population explosion was first of all the consequence
of a public-health revolution largely independent of but parallel to the
industrial revolution. The industrial revolution greatly amplified productivity
in manufacturing, resource extraction, and agriculture. The public-health
revolution greatly increased human life expectancy by giving governments
and doctors easy-to-use tools to conquer many of the major causes of death.
Both had their origins in modern science. But they proceeded by and large
independently.

The mortality decline of the public-health revolution set off the population
explosion: fertility was still high and birth control scarce, hence populations
grew rapidly. However, Easterlin believes that the population explosion
is nearly over: Birth control is now cheap. The education requirements
of modern economies have turned children from capital goods--assets to
a household's production and insurance for the parents' old age--into consumption
goods: sources of joy and of expense. The net result is a fall in the birth
rate to match the fall in the death rate, and a worldwide human population
that will approach stability over the next century.

So Easterlin sees an optimistic future: science and technology raise
living standards, birth control lowers population growth, a century from
now people in developing countries live better than people in developed
countries today, and people in developed countries live better than kings
live today. I think this is a bit toooptimistic: It is not inevitable that
population balance worldwide will be attained through low fertility rather
than high mortality. I see fewer signs of the successful spread of modern
economic growth over the entire world than Easterlin does: I see as many
signs of divergence as of convergence. And I fear that fertility will not
decline completely in developing countries until well after modern economic
growth has taken hold. Moreover, I suspect that the complex set of institutions
that make for liberty, innovation, and growing prosperity is more fragile
than Easterlin does. Even so, I see a good chance that he is right: his
future is certainly a possible one, perhaps the most likely one, even if
a relatively optimistic one.

This brings me to Easterlin's third point: The future he sees, of steadily
rising material prosperity and economic progress, is a "hollow
victory". Economic growth is indeed triumphant, but to no point. For
material prosperity does not make humans happier: the "triumph of
economic growth is not a triumph of humanity over material wants; rather,
it is the triumph of material wants over humanity".

Easterlin believes that people are no happier today in their relative
material abundance than they were three centuries ago in their relative
material poverty. Indeed, Easterlin believes that people are not happier
today in the U.S. than in India. Happiness is attained when you achieve
your dreams and solve your problems. Material abundance helps you do so,
but it also teaches you to dream bigger dreams and pose yourself more complicated
problems.

People used to think that material progress would lead to material
satiation. Lenin looked forward to a time when commodities were distributed
in the way that sugar is distributed in hotel restaurants: it's on the
table, you take what you need, and you leave the rest. Keynes looked forward
to:

the day...not far off when the Economic Problem will take the back seat
where it belongs, and that the arena of the heart and head will be occupied...
by our real problems---the problems of life and of human relations, of
creation and behavior and religion.

And on that day:

We shall...rid ourselves of many of the pseudo-moral principles which
have hag-ridden us for two hundred years.... We shall...assess...the love
of money as a possession--as distinguished from the love of money as a
means to the enjoyments and realities of life--for what it is... one of
those semi-criminal, semi-pathological propensities which one hands over
with a shudder to the specialists in mental disease.

Easterlin believes--and two hundred years of history tell us plainly--that
Keynes and Lenin were wrong: that material desires are never sated, and
never lose importance in the relative scale of human concerns. And so he
calls our victory over material poverty a hollow one, because it has not
been accompanied by any dimunition of the psychological pressures for further
victories.

Last weekend my four year old daughter and I went out behind the house
to pick blackberries. An hour later I returned with three pints of blackberries,
a daughter with a very sticky face, and six scratches and punctures, two
of which were quite painful. These blackberries--acquired at an opportunity
cost of about $15 per pint (plus injuries) on a weekend when Safeway was
selling blackberries for $0.99 a pint--were sweet, and watching my children
eat them was sweeter. Richard Easterlin is probably right that if I had been
living around San Francisco Bay four hundred years ago, watching my children
eat the (few) blackberries the band managed to pick would bring me to the
summit of human felicity.

Does this mean that our technological progress that has brought the price
of blackberries down to $0.99 a pint from $15 a pint has been worthless--
a hollow victory--because each reduction in cost has been accompanied by
an equal reduction in the utility value of a blackberry? Easterlin seems
to think so. I look at my daughter eating blackberries, and I feel certain
that he is wrong. I would be greatly saddened to learn that my descendants
two thousand years hence will have lost their technology, and reverted to
hunting and gathering--even if I were also assured that sociologists using
questionaires to measure their subjective "happiness" would conclude that they
were as happy as we.